After more than a decade of clinical studies, gene therapy for the X-linked bleeding disorder hemophilia B (factor IX, F.IX) deficiency) based on in vivo adeno-associated viral (AAV) gene transfer has enjoyed a major success in 2011. Several patients showed sustained therapeutic expression after hepatic gene transfer. Despite these encouraging results, immune responses against vector and transgene product continue to be of concern for safety and success of gene therapy for hemophilia. At the same time, our prior animal studies demonstrated that hepatocyte-restricted transgene expression from an AAV vector induced immune tolerance to the F.IX transgene product. Tolerance induction critically depended on a CD4+CD25+FoxP3+ regulatory T cell (Treg) response. Optimal hepatic gene transfer increased Treg induction and thus the success rate of tolerance induction. Conversely, we found that innate TLR9-dependent immune responses to the vector may increase adaptive immune responses. This proposal addresses several immunological aspects that are critical to future development of the approach. First, we will further define the mechanism of innate immune responses to AAV vectors and determine links to adaptive responses against vector and F.IX transgene product. Second, we will uncover a mechanism by which optimal hepatic gene transfer can not only prevent but also reverse antibody (inhibitor) formation against F.IX. Our preliminary data support the notion that hepatic AAV gene transfer represents an alternative to current clinical immune tolerance induction (ITI) protocols for hemophilia (which are suboptimal and expensive). Finally, we will extent investigations on the immunology of hepatic AAV gene transfer to treatment of hemophilia A (factor VIII, F.VIII, deficiency), the more common form of hemophilia. F.VIII is typically regarded as more immunogenic and is also more difficult to express at high level. In conventional protein therapy, inhibitor formation occurs far more frequently in hemophilia A than in hemophilia B. For all these reasons, development of a gene therapy for hemophilia A has not been straightforward. We propose that use of a codon-optimized F.VIII cDNA and transient depletion of B cells with anti-CD20 can be exploited to accomplish tolerance induction to F.VIII by hepatic AAV gene transfer. In summary, the following hypotheses will be tested: i) toll-like receptors, inflammatory cytokine production and type I interferon responses are critical components of the innate response to AAV vector; ii) innate immune responses and Treg shape adaptive responses to vector and F.IX transgene product, iii) blockage of innate immunity reduces adaptive responses against vector and transgene product; iv) optimal hepatic gene transfer (under conditions of limited innate immunity and high levels of expression) can effectively reverse inhibitor and anaphylactic responses to F.IX in hemophilia B mice; and v) use of a codon-optimized F.VIII cDNA and transient B cell depletion facilitate tolerance induction to F.VIII by liver gene transfer in hemophilia A mice.